By many accounts, consumer spending is slowing and we see parallel weakness in the %change in consumer credit. However, there is compelling (though anecdotal) evidence that we are poised to see a rebound in the growth of consumer credit. Here's why. Over the last few years, much of consumer spending has been fueled by the use of home equity lines of credit. In reviewing the trends, it has been awhile since we saw consistent double-digit growth month-to-month in consumer credit. Now that the equity tap has been turned off for many consumers, consumer credit vehicles may once again be the go-to credit source for Americans. If this happens, we will no doubt see a return to decent growth in non-equity credit lines.
In fact, institutions trading in securities backed by credit card receivables are feeling pretty good about the stability of the market.
What does this mean for credit unions? Opportunity. Many credit unions shelved or curtailed heavy marketing of traditional consumer credit products while in hot pursuit of equity business. Now may be the time to dust off portfolio growth strategies for consumer credit programs and grab some of that opportunity for ourselves.
